FTX seeks to claw back $460M from Bankman-Fried-backed VC firm

Bankrupt crypto speech FTX is seeking to retrieve $460 cardinal of allegedly misappropriated lawsuit funds from task superior (VC) steadfast Modulo Capital, which received a sizeable concern from Alameda Research past year.

As antecedently reported, FTX’s sister trading firm, Alameda Research was understood to person invested astir $400 cardinal successful Modulo successful 2022 — 1 of the biggest investments undertaken by FTX nether Bankman-Fried’s leadership.

In a March 22 filing, FTX assertion the concern from Alameda Research was nether the absorption of Sam Bankman-Fried — Alameda invested $475 cardinal successful Modulo successful a bid of transfers opening successful May 2022, according to the filing.

On June 16, Alameda entered into a constricted concern statement with Modulo,  according to the filing, which resulted successful Alameda transferring the aforementioned funds to Modulo successful speech for ownership of 20% of Modulo’s Class A shares.

In bankruptcy proceedings, payments made to entities anterior to the bankruptcy filing whitethorn beryllium eligible to beryllium clawed backmost and redistributed to creditors. While the claw-back play is 90 days for astir unsecured creditors, it is 1 twelvemonth for “insiders,” a word that includes wide partners.

As per the colony agreement, Modulo has agreed to repay $404 cardinal successful currency and volition springiness up its assertion to $56 cardinal worthy of assets held connected FTX’s crypto exchange, representing astir 97% of FTX’s archetypal investment.

The colony would besides effect successful Alameda losing immoderate assertion to these shares.

Modulo Capital was founded successful March 2022 by 3 erstwhile executives astatine Jane Street, a New York-based steadfast that erstwhile employed Bankman-Fried and Alameda CEO Caroline Ellison.

Bankman-Fried is besides rumored to person been successful a romanticist narration with 1 of its founders, Xiaoyun “Lily” Zhang, which immoderate person theorized was the information down his propulsion to put successful the obscure VC firm. This rumor has not been verified. 

Bankman-Fried's girlfriend? Xiaoyun "Lily" Zhang, utilized to beryllium romantically progressive with Bankman-Fried, according to 4 radical acquainted with their relationship. her partner, Duncan Rheingans-Yoo, had lone graduated from Harvard 2 years earlier SBF's investment. That's textbook

The woody volition inactive request to beryllium confirmed by United States Bankruptcy Judge John Dorsey, with a question proceeding acceptable for April 12.

Related: FTX debtors record suit against exchange’s Bahamian limb connected ownership of property

In its latest presumption to creditors connected March 17, FTX noted claims against it surpassed $11 billion, compared to conscionable $4.7 cardinal successful assets for a full shortfall of astir $7 billion, truthful portion the $460 cardinal colony would beryllium a immense triumph for creditors it inactive lone represents little than 7% of the existent shortfall.

FTX’s summary of claims vs assets successful a presumption to creditors. Source: Kroll

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